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Bankers Urge Changes in Bush’s S&L; Rescue Plan

Times Staff Writer

A group of independent bankers called on Congress Monday to revise President Bush’s savings and loan rescue plan by limiting a proposed increase in premiums on bank deposits while broadening the types of deposits to be assessed.

Directors of Independent Bankers Assn. of America, meeting in Anaheim for a three-day conference, adopted four recommendations as “interim positions” on the Bush Administration’s proposal.

The group’s recommendations would increase the amount of premiums paid by big banks but lessen the financial impact on its own members, primarily smaller institutions.

Large banks base less of their business on deposits and use methods such as issuing promissory notes to large depositors to get around the regulatory definition of “deposits” used to determine premiums, said Kenneth Guenther, IBAA’s executive vice president.

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The IBAA plan would include money brought in under those methods in the calculation of premiums to be paid on deposits. And it would include deposits placed by foreigners in U.S. banks here or abroad, regardless of whether the money is in dollars or another currency.

“By broadening the assessment base, we won’t have to go as high on premiums,” Guenther said. The trade organization’s plan also would generate about $7 billion more than the estimated $50 billion that the Bush Administration proposal would raise over the next five years, he said.

In this fiscal year alone, the organization figures that its recommendations could raise an additional $500 million above the $14 billion that is expected to be generated by current assessments.

Banks and S&Ls; pay premiums to separate agencies--the Federal Deposit Insurance Corp. and the Federal Savings and Loan Insurance Corp., respectively--to insure their deposits up to $100,000 per account. The President’s plan would raise premiums on assessed deposits and merge the FSLIC into the FDIC, which would manage the FSLIC funds separately.

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